India Withdraws Order On GM Cotton Seeds

Market News

India Withdraws Order On GM Cotton Seeds

The Indian government, after seemingly taking a strong stand on the GM seed technology issue, seems to be backtracking now. India has temporarily withdrawn an order capping royalties on any new variety of genetically-modified (GM) cotton seeds, a government source said, bringing relief to US-based Monsanto Co, the market's sole supplier. "We are temporarily withdrawing the order," said the source, who is involved in the decision-making process but didn't wish to be named because he is not authorised to talk to the media. Last week, India had tightened rules for the sale of genetically-modified cotton seeds, a government order said, in a move that would cap royalties for any new variety that the market's sole supplier, US-based Monsanto Co , decides to develop and sell. The government will now seek feedback from various stakeholders in the next 90 days before reaching a decision, said the source, who gave no reason for the decision to temporarily withdraw the order.

The agriculture ministry in March cut royalties that local seed firms pay to Mahyco Monsanto Biotech (India) (MMB), a Monsanto joint venture with India's Mahyco, following complaints from domestic firms that the venture was overcharging for a gene that produces its own pesticide. Along with cutting the royalties, the government capped genetically modified (GM) cotton seed prices at Rs 800 for a packet of 450 grams after appeals by some state governments and farmers to lower the price of the Bt variety that commands 90% of the market in India. Now, if Monsanto decides to introduce any new, advanced variety of its GM cotton, the world's biggest seed company cannot charge royalties more that 10% of the price of seeds, fixed at Rs 800, for five years from the date of commercialisation, according to the ruling. From the sixth year, the royalties, or trait value, will taper down by 10% every year, said the order, which laid down these guidelines without naming Monsanto. Also, as GM traits are expected to have a limited period of efficacy, any variety which loses its effectiveness will not be eligible for royalties, the order said. The new order is tougher than the royalty arrangements announced in March. The order also specified that any local seed company seeking licenses for selling any new Bt cotton variety shall get the license within 30 days of requesting the licensor.